In describing the synagogues of Bavel in the Twelfth Century, R. Petachia of Ratisbon wrote as follows:
בחולו של מועד אומרים המזמורים בכלי שיר
On the half-holidays they recite the psalms to the accompaniment of musical instruments,
(Travels of Rabbi Petachia of Ratisbon p. 46-47)
It seems like the rabbinic authorities there allowed this, and ...